Bitcoin Whiplash: BTC Soars to $107K, Crashes to $102K as US Loses AAA Rating
Bitcoin just gave traders whiplash with a $5,000 nosedive—because nothing says ’safe haven asset’ like panic-selling on sovereign debt news. The crypto king spiked to $107,000 before tumbling after Fitch’s downgrade of US creditworthiness, proving once again that Wall Street’s ’risk-off’ triggers still move digital markets.
Meanwhile, traditional finance bros clutch their Treasury bonds—because clearly, the system that just got downgraded is the stable one. BTC’s 4.6% drop mirrors S&P futures bleeding, but let’s be real: which asset bounces faster when the Fed inevitably prints the pain away?
Bond yields spike and Bitcoin drops as US receives downgrade
On Friday, the last of the top three credit rating agencies in the United States downgraded the US credit rating on its debt to Aa1, from Aaa, a rating it had held since 1917. With all three major credit rating agencies having now downgraded the US, the impact on the economy is probably about to be felt.
Firstly, treasury yields have already risen as investors perceive the higher risk of holding U.S. Treasury bonds. The baseline 10-year yield has spiked to 4.52%, while the 20 yr and 30 yr yields have surged to over 5%.
Volatility is going to be a major factor on Monday, while overall, the downgrade means that the US dollar just will not have the same SAFE haven attraction for investors as it has up to now.
The Bitcoin (BTC) drop to $102,000 may have been a bit of an overreaction, or perhaps the result of profit taking, with the uncertainty of how the US stock market will react probably a major concern. It remains to be seen how the premier cryptocurrency will perform when the markets open later today.
A final thought on this is that after the previous two rating agency downgrades, the longer term impact on markets was fairly limited. It might even be asked, if investors lose confidence in the US dollar, into which other fiat currency will they put their money?
$BTC drops to 0.786 Fibonacci and gets bought up again
Source: TradingView
Looking at the $BTC chart in the 4-hour time frame, it can be noted that the price crept along the descending trendline for a while before finally breaking free and hitting that $107,000 top early on Monday. However, once it got there the reversal was fairly dramatic and took the price down to perfectly touch the deepest Fibonacci level of 0.786, at around $102,000. From there the price has been bought up again.
By using the impending downgrade fallout in the US stock market, market manipulators have probably had a good day so far.
$BTC bullish weekly candle close
Source: TradingView
The weekly time frame for $BTC continues to display a positive story. The weekly candle closed above the critical $104,000 horizontal level - a very bullish event. Of course, the price is back under this level straight away on Monday, but with the rest of the week still to come, another close above $104,000 could be a possibility.
The indicators in the Stochastic RSI are coming to the top now, but with the 2-week indicators climbing as well, the weekly indicator lines could stay above the 80.00 level for quite some time.
The Relative Strength Index at the bottom of the chart is starting to dip, but once again, there is the whole week left for this to change.
All eyes will be on the US stock market when it opens later on Monday. This is likely going to add a lot of volatility to the mix. That said, the market prices these things in ahead of time, and it WOULD not be a surprise for this bad news to be shaken off relatively quickly. The Global Manufacturing PMI data is released on Thursday - could the Moody’s downgrade be a thing of the past by then?
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
